After boasting last fall that sales of its Galaxy Tab were "faster than expected" and had reached 2 million, Samsung has now admitted to analysts that its figures were only "sell-in" inventory shipped to retailers, and that actual units bought by consumers were "quite small."

Update: Samsung has since noted that rather than "quite small," the executive said "quite smooth," an interesting description of sales that provides little hint at just how many devices actually sold to consumers. Reports of deeply discounted Galaxy Tab offers, and a return rate of 16 percent suggest that "smooth" might also be the wrong word.

Sales of Samsung's Galaxy Tab were closely watched last fall because the device represented the first generation of Android tablets to take on Apple's iPad, as it was the only Android tablet device that was actually reported to be selling in any real quantity.

A month after announcing plans to launch its new 7 inch tablet on all four US carriers at an event in September, Samsung claimed it had sold 600,000 units, and by the end of the quarter it had reported sales of 2 million.

However, in the company's quarterly earnings call with investors on Friday, Samsung executive Lee Young-hee clarified that those numbers related only to inventory channel stuffing, and did not represent actual sales to end users, according to a report by Wall Street Journal blogger Evan Ramstad.

By "sales" we mean unsold inventory

"As you heard," Lee replied to a question asking for more detail on Galaxy Tab sale numbers, "our sell-in was quite aggressive and this first quarterly result was quite, you know, fourth-quarter unit [figure] was around two million.

"Then, in terms of sell-out, we also believe it was quite smooth. We believe, as the introduction of new device, it was required to have consumers invest in the device. So therefore, even though sell-out wasnt as fast as we expected, we still believe sell-out was quite OK."

"Sell-in" refers to sales to retailers and channel distributors, while "sell-out" refers to the actual sales made by retailers to consumers.

The report said Lee was "quite optimistic" about future sales but that she wouldn't forecast sales for 2011. "As you know," Lee said, "the tablet is relatively new and we need to see how the market develops before we give any firm numbers."

Apple has been selling the iPad since April, giving it a head start over the Galaxy Tab of about two quarters. However, Apple sold 3.27 million in its first partial quarter, 4.19 million in its second, and 7.33 million in its third, with global demand regularly outstripping Apple's ability to build enough units during the year.

Mythical market share

Samsung's reported "sales" of the Galaxy Tab were sufficient to distort market share in the "tablet market," inducing one firm to report that Apple's share of tablet sales with the iPad had shipped from 95 percent to 77 percent due to supposedly surging demand for Android-based tablets.

"The Samsung Galaxy Tab was the main driver of Android success, reported Neil Mawston, a director at Strategy Analytics. His firm contrasted Apple's sales of more than 7.33 million iPads against collective Android shipments that had reportedly jumped from just 100,000 in the previous quarter to 2.3 million in the winter quarter.

The vast majority of that "jump" was Samsung's unsold inventory of 2 million units shipped but not sold, leaving the real number of Android tablets actually sold to consumers and in use "quite small."

Gartner and IDC have similarly imagined a market for "media tablets" much larger than the iPad itself, but both still admit that Apple's iPad is the only significant member of this group, which the reporting companies currently segregate from PC and netbook sales, Windows-based Tablet PCs, and low end tablets oriented toward ebook reading.

Tablet market greatly exaggerated

The Journal report noted that a Samsung spokesman responded in an email today saying "that most media accounts treat Galaxy Tab as 'a noteworthy accomplishment,'" adding, I believe the company, overall, is on the same page.

Major initial reviews of the Galaxy Tab characterized it as a product that 'needs work,' was "not exemplary," and "not without frustrations," even as the reviewers bent over backward to describe it as a potential "real rival" to the iPad.

In its more technical review examining the Galaxy Tab's HTML5 capabilities, Sencha described the device as odd and disappointing, with missing support for key web technologies, poor performance in general due to a lack of hardware accelerated animation, poor media performance, and a strange device pixel ratio that "makes the Galaxy slightly bigger than a regular phone screen in CSS pixels, but not really big enough to handle what people want to put in a tablet screen."

Samsung is not alone in reporting channel stuffing as sales. In the same quarter, Microsoft used similarly creative inventory channel "sales" reporting to create the impression that Windows Phone 7 devices were selling to users, when in fact just 1.5 million devices had been shipped to resellers in hopes that some would eventually sell.

It can't be assumed that this is channel stuffing. There could have been real expectations that both WP7 and the Galaxy Tab would have sold close to those numbers, even though it didn't work out.

Channel stuffing is when a company puts more product into the channel than they KNOW they will sell just to make the financials. We would have to see evidence of that. It's a serious misjudgment, because it is illegal to report stuffing as income for the quarter.

Typical PC junk-makers. At least I have to give the guy credit to at least have some kind of decency to man-up and tell it like it is.

This is the problem with manufacturers rushing a product that they know is not ready for prime-time, is junk, and provides minimal user-experience. Even worse is when the media comes out with articles praising the competition and the apple-haters giving anything Android great reviews.

It can't be assumed that this is channel stuffing. There could have been real expectations that both WP7 and the Galaxy Tab would have sold close to those numbers, even though it didn't work out.

Channel stuffing is when a company puts more product into the channel than they KNOW they will sell just to make the financials. We would have to see evidence of that. It's a serious misjudgment, because it is illegal to report stuffing as income for the quarter.

True, but it is clearly a misrepresentation of sales data. Samsung made it seem as though their product was actually selling to customers. Now they're stuck with a full channel and more than likely won't be able to "sell" as many in the following quarter. This is probably why they're warning investors of small actual sales numbers now. And the possibility of many left in the channel being dumped when newer Android tablets hit the market.

Disclaimer: The things I say are merely my own personal opinion and may or may not be based on facts. At certain points in any discussion, sarcasm may ensue.

It can't be assumed that this is channel stuffing. There could have been real expectations that both WP7 and the Galaxy Tab would have sold close to those numbers, even though it didn't work out.

Channel stuffing is when a company puts more product into the channel than they KNOW they will sell just to make the financials. We would have to see evidence of that. It's a serious misjudgment, because it is illegal to report stuffing as income for the quarter.

Agreed but there maybe some stuffing going on as the reported sales figures were most likely intended to achieve the media frenzy they did and then actually encourage sales of the very product that had been stuffed ... if you see what I mean.

From Apple ][ - to new Mac Pro I've owned them all.Long on AAPL so biased"Google doesn't sell you anything, Google just sells you!"

True, but it is clearly a misrepresentation of sales data. Samsung made it seem as though their product was actually selling to customers. Now they're stuck with a full channel and more than likely won't be able to "sell" as many in the following quarter. This is probably why they're warning investors of small actual sales numbers now. And the possibility of many left in the channel being dumped when newer Android tablets hit the market.

Yep. One way or another, they will sell / dump these units at fire-sale prices just to unload them and somehow claim that all their Android tablets are sold-out. \

It can't be assumed that this is channel stuffing. There could have been real expectations that both WP7 and the Galaxy Tab would have sold close to those numbers, even though it didn't work out.

Channel stuffing is when a company puts more product into the channel than they KNOW they will sell just to make the financials. We would have to see evidence of that. It's a serious misjudgment, because it is illegal to report stuffing as income for the quarter.

Whatever you call it they flat out misrepresented the truth when they first report 600K and later 2M. I think (although I have no hard facts) that they felt they could sell more by reporting higher numbers - since very few were actually sold to end users there were no complaints which some might read as meaning it must be good. They new what they were doing - the gamble did not pay off as they had hoped so they will suffer this next quarter (at least) I am sure.

What was Samsung thinking? How on earth did they imagine that is was going to work for them to make a big deal of millions of "sales" and then admit that sales are "quite small"?

My guess is that there's going to be some strenuous walk-back within the day, as this story blows up on line. Maybe they thought an offhand remark would slip under the radar, but they're going to have to say something. You know, executive misspoke, didn't have all the info, or just the boilerplate "We are very pleased with the performance" etc.

I'm assuming a quarterly earnings call required them be at least somewhat forthcoming about actual sales, if for no other reason that the figures were going to speak for themselves. But that being the case, surely they knew this day would come? Did they hope to get momentum going and catch up on sales after the fact?

Man, Samsung, first that horror show at CES and now this. Are you actually insane?

They spoke of the sayings and doings of their commander, the grand duke, and told stories of his kindness and irascibility.

How could sell you what few people are just curious about? Most Android fans know that they don't want a Galaxy Tab. They just want to see what it does. The truth is that it does nothing. The fact that Hyundai, a staunch Korean Automaker used iPad for their new Luxury car owner's manual, says a lot about universal acceptance of iPad and the trust large corporations have on Apple as a company that will be around to support the products it sells. Hyundai not using Samsung Galaxy Tab, is stronger endorsement of iPad.

Right now Motorola and RIM are making noise and blowing same smoke. When their tablets actually appear in the market, the same thing will happen.

The mistake that all these wannabes make is this; iPad is not meant to replace is laptop. iPad is a tool, not a commodity electronic. I don't see any major corporation ordering Motorola Xoom for the IT department. Most buyers will use to play a few games that will be available, and also to to get on internet and watch videos.

I agree with the comment above... When will they learn? Yes, they had a "form factor" from which to reverse engineer, thanks to Apple's ipad, but you have to offer at something close to equal usability for the user. It's called "quality!"

MS, Dell and others are notorious for rushing a subpar product to market and then wonder why it flops.

It can't be assumed that this is channel stuffing. There could have been real expectations that both WP7 and the Galaxy Tab would have sold close to those numbers, even though it didn't work out.

Channel stuffing is when a company puts more product into the channel than they KNOW they will sell just to make the financials. We would have to see evidence of that. It's a serious misjudgment, because it is illegal to report stuffing as income for the quarter.

If they forced partners (ie, carriers/retailers) to buy inventory, then there may be some legal improprieties there. But otherwise, a sale is a sale. MS and Samsung don't sell direct to consumers (for the most part). Their customers are their retailers, so yes, a sale is a sale when the inventory is transferred to the carrier or retail partner.

Now, is it misleading? Yes. Of course people want to know the actual units sold to customers, not those sold to retailers. But the retailers aren't required to divulge that info. Notice, when pressed by the analyst Samsung never actually said exactly how many units were "sell-outs" since they don't have to. They know the number, but are under no obligation to share it.

Typical, typical and more typical!
Let me tell you that the Android business is bull****. If you play in that arena you will be left with so much unsold sh** as you try and out do the scores of OEMS pimping Android as well.

If they forced partners (ie, carriers/retailers) to buy inventory, then there may be some legal improprieties there. But otherwise, a sale is a sale. MS and Samsung don't sell direct to consumers (for the most part). Their customers are their retailers, so yes, a sale is a sale when the inventory is transferred to the carrier or retail partner.

This is not always the case.

The true measure of a man is how he treats someone that can do him absolutely no good. Samuel Johnson

"The Samsung Galaxy Tab was the main driver of Android success, reported Neil Mawston, a director at Strategy Analytics. His firm contrasted Apple's sales of more than 7.33 million iPads against collective Android shipments that had reportedly jumped from just 100,000 in the previous quarter to 2.3 million in the winter quarter.

Nice career move, Mr. Mawtson!

Tim Cook is gay, believes in climate change, and cares deeply about racial equality. Deal with it (and please spare us if you can't).

It can't be assumed that this is channel stuffing. There could have been real expectations that both WP7 and the Galaxy Tab would have sold close to those numbers, even though it didn't work out.

Channel stuffing is when a company puts more product into the channel than they KNOW they will sell just to make the financials. We would have to see evidence of that. It's a serious misjudgment, because it is illegal to report stuffing as income for the quarter.

This is exuberant predictions that never panned out and thus resulting in perceived Channeling Stuffing.

What was Samsung thinking? How on earth did they imagine that is was going to work for them to make a big deal of millions of "sales" and then admit that sales are "quite small"?

In all fairness to Samsung, they could have assumed all the orders coming in would lead to actual sales. A lot of companies forecast sales based on distribution levels. Apparently, it didn't work in their favor, now they're stuck with a huge channel of inventory after everyone showed off competing warez at CES. The only thing they may have going for them, is that a lot of those new devices aren't expected to be out until this summer.

Disclaimer: The things I say are merely my own personal opinion and may or may not be based on facts. At certain points in any discussion, sarcasm may ensue.

I happened to be in an Office Depot the other day waiting on some printing work, and noticed a Galaxy display, so thought I'd play for a minute. A minute was all it took to walk away in aggravation. The touch and slide interface on that thing is horrible to say the least. I had to tap things 3 and 4 times to select. And the sliding with your fingertip was choppy and almost unusable.

No wonder this POS went down in flames. You don't realize the elegance of the iPad/iPhone until you use something like this. I love Samsung LCD's. They should be ashamed to disgrace their branding with this hunk of dung.

It can't be assumed that this is channel stuffing. There could have been real expectations that both WP7 and the Galaxy Tab would have sold close to those numbers, even though it didn't work out.

Channel stuffing is when a company puts more product into the channel than they KNOW they will sell just to make the financials. We would have to see evidence of that. It's a serious misjudgment, because it is illegal to report stuffing as income for the quarter.

Remember Palm? They were reporting good sell-in numbers (did not specify how much Pre though) and then dropped to almost nothing? They managed to keep the illusion for two earnings reports, and then... As far as I remember, their shares dropped from $18 to $4 in a week or so.

Remember Zune? Microsoft promised to sell one million units during the first year, ending in the summer. Many "journalists" tried hard to make people feel this is a huge number, although Apple was selling an order of magnitude more - every quarter. Then Microsoft reported that they met their target almost a month early, in June. But those were "sold-in", not "sold-out". In December you could buy those 1st gen Zunes with 50% to 70% discount. You know how the Zune story ends.

Back to now. It will be easier to paint the Galaxy Tap sales dropping to zero as a result of new Android tablets coming to the market. But this won't be the whole story. And we will never know the truth.

I happened to be in an Office Depot the other day waiting on some printing work, and noticed a Galaxy display, so thought I'd play for a minute. A minute was all it took to walk away in aggravation. The touch and slide interface on that thing is horrible to say the least. I had to tap things 3 and 4 times to select. And the sliding with your fingertip was choppy and almost unusable.

No wonder this POS went down in flames. You don't realize the elegance of the iPad/iPhone until you use something like this. I love Samsung LCD's. They should be ashamed to disgrace their branding with this hunk of dung.

This is precisely what the phandroids refuse to acknowledge. They will praise all the high-end hardware, but always gloss over the horrible gui experience in the name of "openness".

This is why (imho) the OS is as important - if not more - than the hardware. Sticking a turbocharged V8 into a Volkswagon bug is not the same thing as that same motor in a Rolls Royce.

I'm a systems-engineer and been developing software for 20+ years. I find it absolutely shameful that people try to pass of badly written software in the name of some "higher calling". It's a curiosity just for tech-heads, nerds, and geeks that continuously believe that every user should be certified in computer science in order to use computers.

True, but it is clearly a misrepresentation of sales data. Samsung made it seem as though their product was actually selling to customers. Now they're stuck with a full channel and more than likely won't be able to "sell" as many in the following quarter. This is probably why they're warning investors of small actual sales numbers now. And the possibility of many left in the channel being dumped when newer Android tablets hit the market.

Samsung clearly stated "shipped" in its announcements. It's the media and bloggers, (especially the Apple haters salivating for some fodder) who publicized the figures as end-demand, as comparisons to iPad early days were made. However, iPad took couple months to make it beyond US Apple & BBY stores, and even then it was several more months before any storefront could hold stock for more than a day. Took Apple 9 months to roll out to 40 countries, opposed to Samsung taking only couple months to hit ~100 countries/~200 carriers. They are sold virtually everywhere. In order to cover handful of units in every storefront would easily take 2M units.

I would be very surprised if Samsung shipped more than 500k more. Really even 1K more (for refill). It's done. Holidays are over and new tablets on the way. The Galaxy Tab is a way overpriced piece of junk relatively speaking. Carriers/Resellers had huge desire to have a tablet product on the shelves for the holidays and Samsung was the only one that could deliver.

Judging by how many of these devices are on ebay (in the UK at least) at below retail pricing, suggests that many people have bought these (or got them as xmas presents) and are disappointed with them.

To be fair, it is difficult for Samsung to state exact sales as they follow the standard manufacturer -> wholesale -> retail route whereas Apple has direct relationships with all retailers and also picks up activation stats via iTunes.

The other angle is that it is currently Apple versus all others, and there is no consistency with the all others. Some of the others are Windoze 7 based whilst others are Android 2.x and some (coming soon) ones will be Android 3.0.

The Android ones (and to some extend Windoze ones) have some level of UI tweaking done by the manufacturers and there is no way of knowing whether the Apps in the various stores will actually work with these devices.

However, there are some silver linings in all of this, as some of the competition (I'm likely to get flamed at this point), do have some good points which Apple may view and come up with their interpretations.

For example, the App switching / multi-tasking on some is more slick than iOS, and more UI customisations to make things how you want.

We know that iPad 2 will bring new hardware features, but the big unanswered question is; where is iOS going, especially with 5.x.

I hope for;
1. Being able to slightly resize and adjust spacing of app icons (especially on iPad) to allow for more icons per screen.
2. Double clicking the home button to get the App switching brings up a folders type display but with scrolling so that you can see more background apps at the same time.
3. Background apps to have some processor cycles (maybe 2%) allocated to them whilst in background so that they don't take as long to wake. Once the App Switcher is activated, this percentage could increase to say 15%.
4. A simple and quick way to switch the various radios (Wireless, 3G, Bluetooth) on and off as required, and to adjust brightness / volume.
5. Better alerts and notifications.